Unions demand pension fund answers

It has begun to dawn on South African public sector trade unionists that a very large sum of money from their pension funds may already have been handed over to politically motivated investments under the guise of promoting Black Economic Empowerment (BEE). The Government Employee Pension Fund (GEPF), that probably accounts for at least R1.6trillion of the funds handled by the government controlled Public Investment Corporation (PIC) allows for 5% of such funds to be placed to the advantage of BEE.

But 5% of GEPF funds is equal to at least R16 billion. This is a considerable amount of money and the unions, notably the PSA (formerly Public Servants Association), have realised that they should have greater oversight over how this money is invested.

Their concern follows fears that the cash strapped administration may be poised to dip into the pension fund that is in surplus.

PSA general manager Ivan Fredericks has already lodged a demand that the labour movement be represented on the board of the PIC. And he has pointed out that failure to comply could mean the unions moving their funds away from the PIC. He has also called for a full list of BEE investments “including actual investments made and the current value of each to be made public”.

There is a range of such investments, some of which seem to have no commercial rationale. However, although the PIC is empowered by the GEPF to invest a portion of pension funds in order to promote BEE and other “areas of social responsibility”, this should not be to the detriment of positive returns.

In recent months questions have been raised about the rationale behind the PIC investment in the Airports Company (Acsa) and in Independent News Media (IMSA). Several other apparently unprofitable investment in other unlisted entities are also being queried.

Fredericks has also requested that, when detailing all investments, the PIC includes “a list of politically connected persons” involved in such deals. The PSA also wants the unions to be represented on the boards of companies where employee pension funds are invested.